South Korea's exports are showing signs of improvement, but uncertainties from China continue to weigh on the economy, a state-run think tank said Thursday.

The assessment came after the country reported a trade surplus for the third straight month in August, although exports fell for the 11th consecutive month amid sluggish chip sales.

"The decrease in semiconductor exports is decelerating, and other categories are also exhibiting signs of better export performance," the Korea Development Institute (KDI) said.

The KDI, however, said economic uncertainties are "escalating," mostly due to China's economic instability, along with the growing inflationary pressures, amid the hike in global crude prices.

"The Chinese economy faces growing downside risks, such as financial instability in real estate firms and sluggish real estate investment," the researcher said.

"Furthermore, the increase in consumer prices, driven by rising international oil prices, could partially hinder the alleviation of economic downturns," it added.

The KDI, however, said it was notable that the manufacturing output is showing signs of improvement driven by the semiconductor sector.

The think tank said "the underlying trend of slowing inflation" continued, despite some seasonal factors.

South Korea's consumer prices increased at a faster-than-expected pace in August due to higher prices of agricultural and manufactured goods, rising 3.4 percent on-year. It was the highest on-year jump since the 3.7 percent growth tallied in April.

"Considering that the expanded increase in consumer prices can be explained solely by the changing contributions of volatile petroleum and agricultural products, it is difficult to posit this as a change in the overall inflationary trend," it added.

Source: Yonhap News Agency